UBS Warburg Downgrades Mercury Computer to 'Hold'

Analyst Donald Young says the company should be showing stronger revenues, because of increased priorities on government defense programs

UBS Warburg downgraded Mercury Computer (MRCY ) to hold from strong buy.

Analyst Donald Young continues to be puzzled by Mercury's performance in a general environment that should be favorable to the company -- with increased defense spending focused on the digitalization of battlefield and homeland security. He says he's long been a supporter of Mercury.

At present, Young says he's unable to stand behind his "strong buy" rating with increased priorities put on government defense programs that should benefit Mercury, with other defense contractors not reporting similar problems. He says he's also unable to fully explain these massive revenue misses.

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